WGU - D089 - Principles of Economics STUDY GUIDE.
How are Positive and Normative economics different from each other? - Positive economics clearly
states and economic issue, and normative economics provides the value-based solution for the issue.
What are factors of production? - The resources the economy has available to produce goods and
services
How can Labor's contribution to an economy's output of goods and services be increased? - By
increasing either the quantity of labor of human capital.
What are two keys to the use of an economy's factors of production? - Technology and, in the case of
a market economic system, the efforts of entrepreneurs
For every factor of production (or input) what is there an associated factor of? - Payment
What are factor payments? - What the firm pays for the use of the factors of production
When human want exceeds the available resources what is the result? - Scarcity
If the inputs of production are underutilized, is a decrease in production of the other good required
when increasing production to the point that the output combinations sit on the production
possibilities frontier? - No
How is opportunity cost calculated? - By dividing the amount of a good you have given up by the
amount of the good you have gained.
How does opportunity cost appear along a linear production possibilities frontier? - As a constant
What is happening to opportunity cost along a bowed out production possibilities frontier? - An
increase in the quantity demanded
https://www.stuvia.com/
,What is the inverse relationship between price and quantity known as? - The law of demand
What does a fall in the price of a good almost always cause? - An increase in the quantity demanded
What are positive and normative economic thought? - Two specific aspects of economic reasoning
What does the law of demand assume? - That all variables that affect demand, other than price,
remain constant
What is a demand curve? - a graphical representation depicting the relationship between a good or
service's price and the quantities consumers are willing to buy at those prices.
What is a demand schedule? - A table view of the price-quantity pairings that compose the demand
curve
What will result in movement along a demand curve (up or down)? - A change in price - a change in
quantity demanded
What will result in a shift in a demand curve (left or right)? - A change in a non-price - a change in
demand
What causes changes in demand (shifts in the demand curve)? - - Changes in consumer income,
tastes, and preferences
- The size of the population
- prices of other goods such as complements and substitutes
- expectations about the future.
What fundamental similarity do nearly all demand curves share? - They slope down from left to right
What is the positive relationship between price and quantity known as? - The law of supply
https://www.stuvia.com/
, What does the law of supply assume? - That all variables affecting supply, other than price, remain
constant
What does a rise in the price of a good or service increase? - The quantity supplied of that good or
service
What does a supply curve depict? - The relationship between the price of a good or service and the
quantities companies are willing to sell at those prices
What is a supply schedule? - A table view of the price-quantity pairing that compose the supply
curve.
What will suppliers do to adjust for non-price changes related to the determinants of supply? - Shift
production
What will suppliers do to adjust for price-related changes on the supply curve? - Move production
levels
what are changes in supply (shifts in the supply curve) caused by? - Prices of inputs,
technology,expectations, number of sellers, and government policies and regulations
What fundamental similarity do nearly all supply curves share? - They slope up from left to right
When does the equilibrium price and equilibrium quantity occur? - Where the supply and demand
curves cross.
When does equilibrium occur? - When the quantity demanded is equal to the quantity supplied
Why would the price be below the equilibrium level? - The quantity demanded will exceed the
quantity supplied. -- Excess demand or a shortage will exist.
What is occurring if the price is above the equilibrium level? - The quantity supplied will exceed the
quantity demanded. -- Excess supply or a surplus will exist
https://www.stuvia.com/
How are Positive and Normative economics different from each other? - Positive economics clearly
states and economic issue, and normative economics provides the value-based solution for the issue.
What are factors of production? - The resources the economy has available to produce goods and
services
How can Labor's contribution to an economy's output of goods and services be increased? - By
increasing either the quantity of labor of human capital.
What are two keys to the use of an economy's factors of production? - Technology and, in the case of
a market economic system, the efforts of entrepreneurs
For every factor of production (or input) what is there an associated factor of? - Payment
What are factor payments? - What the firm pays for the use of the factors of production
When human want exceeds the available resources what is the result? - Scarcity
If the inputs of production are underutilized, is a decrease in production of the other good required
when increasing production to the point that the output combinations sit on the production
possibilities frontier? - No
How is opportunity cost calculated? - By dividing the amount of a good you have given up by the
amount of the good you have gained.
How does opportunity cost appear along a linear production possibilities frontier? - As a constant
What is happening to opportunity cost along a bowed out production possibilities frontier? - An
increase in the quantity demanded
https://www.stuvia.com/
,What is the inverse relationship between price and quantity known as? - The law of demand
What does a fall in the price of a good almost always cause? - An increase in the quantity demanded
What are positive and normative economic thought? - Two specific aspects of economic reasoning
What does the law of demand assume? - That all variables that affect demand, other than price,
remain constant
What is a demand curve? - a graphical representation depicting the relationship between a good or
service's price and the quantities consumers are willing to buy at those prices.
What is a demand schedule? - A table view of the price-quantity pairings that compose the demand
curve
What will result in movement along a demand curve (up or down)? - A change in price - a change in
quantity demanded
What will result in a shift in a demand curve (left or right)? - A change in a non-price - a change in
demand
What causes changes in demand (shifts in the demand curve)? - - Changes in consumer income,
tastes, and preferences
- The size of the population
- prices of other goods such as complements and substitutes
- expectations about the future.
What fundamental similarity do nearly all demand curves share? - They slope down from left to right
What is the positive relationship between price and quantity known as? - The law of supply
https://www.stuvia.com/
, What does the law of supply assume? - That all variables affecting supply, other than price, remain
constant
What does a rise in the price of a good or service increase? - The quantity supplied of that good or
service
What does a supply curve depict? - The relationship between the price of a good or service and the
quantities companies are willing to sell at those prices
What is a supply schedule? - A table view of the price-quantity pairing that compose the supply
curve.
What will suppliers do to adjust for non-price changes related to the determinants of supply? - Shift
production
What will suppliers do to adjust for price-related changes on the supply curve? - Move production
levels
what are changes in supply (shifts in the supply curve) caused by? - Prices of inputs,
technology,expectations, number of sellers, and government policies and regulations
What fundamental similarity do nearly all supply curves share? - They slope up from left to right
When does the equilibrium price and equilibrium quantity occur? - Where the supply and demand
curves cross.
When does equilibrium occur? - When the quantity demanded is equal to the quantity supplied
Why would the price be below the equilibrium level? - The quantity demanded will exceed the
quantity supplied. -- Excess demand or a shortage will exist.
What is occurring if the price is above the equilibrium level? - The quantity supplied will exceed the
quantity demanded. -- Excess supply or a surplus will exist
https://www.stuvia.com/
